EU nations get cold feet over climate change fund

BRUSSELS (Reuters) - EU nations have yet to come up with a plan on how to fill a multi-billion euro fund to help tackle climate change, even as the region's executive body hosts talks with countries likely to bear the brunt of extreme weather.

The European Union recommitted to providing 7.2 billion euros ($9.4 billion) for the fund over 2010-12, according to draft conclusions seen by Reuters ahead of a meeting of EU finance ministers next week.

But after that, how much cash will flow is unclear as the text, drafted against the backdrop of acute economic crisis in the euro zone, states the need to "scale up climate finance from 2013 to 2020", but does not specify how.

The Green Climate Fund aims to channel up to $100 billion globally per year by 2020 to help developing countries deal with the impact of climate change.

Its design was agreed at international climate talks in Durban last year.

Europe's Climate Commissioner Connie Hedegaard is fighting to build on the fragile international agreement in Durban.

On Monday and Tuesday, together with the Danish EU presidency, she is holding informal discussions in Brussels with members of what some call the "coalition of ambition", ahead of U.N. talks in Bonn later this month.

The coalition is a union of the EU, the Alliance of Small Island States and the Least Developed Countries. At the U.N. talks in Durban, it played a lead role in forging agreement on keeping alive the Kyoto process, the only global framework on addressing global warming.

Hedegaard told reporters the talks in Brussels were "informally testing different ideas".

"We are all in agreement: no back-tracking, no less ambition. What binds us is this idea we will push for ambition."

Representing the low-lying Marshall Islands, Tony deBrum, minister in assistance to the president, said the EU's leadership had thrown "a life-line" to parts of the world most vulnerable to rising sea levels.

"For us, this is a matter of the survival of a people," he said. "A culture, a language, a way of life."

'STUBBORN'

Non-governmental organization Oxfam said "intransigence" from some EU member states was putting the coalition at risk as they are arguing against firm commitments to finance after 2012.

"At a critical moment in the fight against climate change, Europe looks to be sitting back rather than stepping up," Lies Craeynest, Oxfam's EU climate change expert, said.

Debate within the EU has also focused on how much of the bloc's $30 billion share of the $100 billion should come from the private sector, which would reduce the need for public funds.

The draft conclusions ahead of the May 15 EU ministerial meeting noted "further efforts are required to clarify the concept of private financing and its contribution to the $100 billion".

Representing the Danish EU presidency Martin Lidegaard, minister for climate, energy and building, told reporters there were gaps to fill in terms of pledges to curb greenhouse gas emissions and promises of finance.

"There are some areas where only public funds will do," Lidegaard said, but added public finance could also help to leverage private funds.

"Between public and private is definitely an area we have to explore."

Some money could come from levies on shipping and aviation, although these sources are contentious.

Since January, all airlines using EU airports have been required to offset their carbon emissions using the EU's Emissions Trading Scheme (ETS), prompting an outcry from some non-EU nations.

The level of protest has intensified effort at the U.N.'s International Civil Aviation Organization (ICAO) to come up with a global plan for tackling airline emissions. If achieved, that would justify modifying the EU scheme, the Commission has said.

Experience suggests it would be rash to hope for too much from ICAO. The European Commission said the EU was driven to bringing all airlines into its scheme because more than a decade of talks at ICAO had produced no result.

The Commission is also working with the International Maritime Organization (IMO) to find a solution for shipping emissions.

The draft conclusions called on "the EU and its member states to further engage effectively in negotiations in ICAO and IMO to support carbon pricing schemes".